How to Live On a Tight Budget

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Nobody ever said it was easy—or fun—to live on a tight budget. Still, if you go about it the right way, you can cut expenses and live a good life at the same time. You have to watch every penny you spend and carefully squeeze value from every expenditure. Soon enough you’ll be enjoying life again without looking over your shoulder for debt collectors. Here are some suggestions:

Make a budget. If you have to live on a tight budget, you must be aware of exactly how much money you’re making and spending every month. Add up and compare all of your bank statements, bills, receipts, paychecks, and anything else you need to fully track your income and spending. This will let you see how much money you’re working with and what changes you need to make.[1]

Carefully note how much money you make each month. Mentally set aside enough to cover income taxes you'll pay later if you don't have enough automatically deducted from your paychecks. If you're an independent contractor, you’ll want to set aside roughly 20% of your income for taxes. Place that money in an interest-bearing account for use come tax season.

If you have sources of irregular income, include them in your calculations.

Track your spending. Write down how much you spend on groceries, rent, car expenses, and so on. See which ones you can cut back and which can’t be changed.

Know whether you’re making as much as you're spending. The goal is to be able to save at least a bit of money every month. If that seems impossible, look carefully at every expenditure, and be creative in finding ways to reduce them even a little.

For instance, if you find you're spending a lot on clothing, ask yourself if you simply like the act of shopping. Do you really need more clothes?

If you find that you’ve spent too much on entertainment, find new ways of eating and otherwise enjoying yourself at home.

Find cheap ways to have fun outdoors, too: hiking, sports, or just enjoying a nice day with a few friends and a picnic basket full of food.

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Have a plan. Know ahead of time how much money you can spend on specific things every month. If you run out of money in that category before the month is over, you'll know to be more careful the following month.[2]

Frugality is easier to embrace when you have a worthwhile goal in mind: avoiding debt collectors, for example, or saving for the future.

Tracking every single expenditure may seem like an unpleasant chore, but you may find that it becomes a useful and eye-opening habit. It should help you live within your means, which ultimately will make your life much easier.

There is software available for most devices that allows you to make a budget and track your spending. Expense Manager and Expenditure are two examples.

Permit yourself a small amount to spend frivolously. You'll be more careful about this if you use cash instead of credit.

Separate your wants from your needs. A good way to stick to your budget is to have a clear idea of when you absolutely need something and when you just think you need it. Make a list of all the things you buy regularly. Consider whether you can reduce or even eliminate them from your life. What do we really need, after all, to stay alive? Some food, water, a bit of shelter. Everything else is discretionary when you think about it. So how interested are you in living a life free of financial worry?[3] How much is a good night's sleep worth to you? Here are some places to start economizing:

If you go out to eat, skip the appetizers, and enjoy dessert at home.

Do you need to get manicures and pedicures twice a month? Cut that down to once a month or once every other month.

Do you absolutely have to buy season tickets for sports or theater? You can save a lot of money if you attend only a few games or shows a year and watch at home the rest of the time.

Do you need to get drunk every time you go out with friends? If so, you may have the wrong friends. But if you occasionally decide to stay sober and drive, you’ll save a lot on cab fare (to say nothing of the booze). In any case, don't drive if you’re drunk just to save cab fare!

Do you need to "impulse buy" that magazine when you're standing in the check-out line? You could read the highlights online or borrow the issue from a library. If you buy a lot of issues, consider subscribing instead.

Shop for clothing bargains. You can get some great outfits without spending a lot. It just takes a bit of foresight and patience to get the clothes you want at attractive prices.[5] Here are some shopping tips:

Pick department stores that are known for their reasonable prices. Don’t reject such places before you see that there are plenty of cute, affordable styles you can buy there.

Wait for items to go on sale. There’s no reason to buy something at full price.

Shop for seasonal items at the end of the season. Get clothes you need for the following year on super sale instead of getting expensive items before the season has begun.

Many department stores will refund the difference between the sale price on an item and the earlier price you paid for it. Keep all of your receipts for this purpose.

Keep an eye out for quality. You may be better off buying a more expensive, higher-quality sweater that will last you years rather than a cheaper item that won’t last one season.

Learn to sew. This can help you rescue torn items instead of spending money on new ones.

Shop at a thrift store. You can find many fun, funky items at a fraction of the cost of the clothes sold in department stores.

Spend money wisely when you go out for food or drinks. You don't have to be a complete social recluse just because you’re living on a tight budget. You should occasionally go out to eat or grab a coffee or a drink with a friend. There are ways you can do this without spending a lot of money. Here are some tips:

If a friend asks you to go out for a drink, pick a place with good happy-hour deals so you can get the most bang for your buck.

If you’re not going to be driving but are preparing for a night of drinking with your friends, have a drink or two at home (preferably with company) so you don’t splurge on fancy cocktails when you’re out.

If you’re having dinner with a big group, suggest separate checks. This helps prevent overpaying.

When you do go out to eat try to have a snack at home so you don’t show up at the restaurant starving. If you’re really hungry when you sit down, you’re liable to order (and pay) too much and regret it later.

Save on movies. While going to a movie with friends can be a fun way to pass the time, movies aren't cheap, and if you add parking, snacks and a soda, you could end up spending more than $25 just to see a movie. If you want to spend your money wisely, you’re far better off watching movies at home with your friends.[6] Here’s how to do it:

Set up a cozy home theatre. Make the room comfortable and welcoming so you’re glad you're not in a crowded movie theatre.

Make some popcorn or other cheap snacks.

Have your friends bring over their DVDs, or watch Netflix or another live-streaming service on your television so you don’t have to spend much money.

Grocery shop like a pro. One important way to spend money wisely is to shop for groceries as efficiently and cost-effectively as possible.[7] Here are some money-saving suggestions:

Shop with a list of items you really need. Buy only items on the list and avoid impulse buys of things you may not use.

Make a weekly menu before going grocery shopping. This will keep you from buying too much produce or meat that could go bad if you don’t cook it right away. You may want to shop twice a week to keep things fresher.

Make a habit of using everything in your pantry before adding to it. This way you won’t waste money by throwing out expired foods.

Buy store-brand products instead of name brands. This can save you 10% or more on your grocery bill while getting substantially the same products.

Buy in bulk. If you find a larger size of a product you know you’ll be able to use before it expires, buy it instead of a smaller version, because you’ll save money in the long run.

Go grocery shopping when you're not hungry. This will prevent hunger from prompting you to buy everything that looks good.

If you find that an item you often use has gone on sale, buy as much of it as you'll need in the foreseeable future.

Have fun at home instead of going out. Another way to spend money wisely is to devote more time to fun and entertainment at home. Here are some great substitutes for going out:

Celebrate your birthday by throwing a party at home. Make a mix of your favorite songs, tasty punch, and creative appetizers. Decorate your home to look festive.

Buying games like Twister, Scattergories, Connect Four, or Clue can result in many hours of fun. Making this investment once can make being at home much more fun, and it’s better than buying something that you “use” once such as food or drinks.

Share time at home with your significant other. Open some cheese, crackers, and a nice bottle of wine instead of going out. It can be just as romantic at home if you set the mood.

Invite a friend over to bake cookies or brew some tasty tea. This is a fun and inexpensive way to spend time at home.

Use coupons. They can turn everyday items into great deals. Watch for weekly mailings from local stores, online deals, or other discounts on items you regularly buy and truly need. Just be careful not to buy something simply because it's on sale. Be sure you'll really use it.[8]

You may also get store wide coupons after spending a certain amount of money at a supermarket or pharmacy. Hang on to those, and use them before they expire.

Eat at home as often as you can. One enormous expense for some people is eating out often. If you make restaurant food an occasional treat (perhaps when you're too tired to cook), you'll save a lot. Don't forego all social engagements and eating out entirely. Just do it once in a while.[10] There are ways to make eating at home a more exciting and cost-effective option:

If a friend suggests you meet for dinner, offer to cook at home, or say you’d like to meet up for drinks instead. You can be honest about the fact that you want to save money.

Make sure there are tasty and varied food options on your weekly at-home menu, so the prospect of eating at home doesn’t fill you with dread.

Have a few cheap frozen meals in the freezer. These will be a great go-to option when you’re too tired to cook.

Make your own coffee at home. Getting fancy lattes or iced coffees at a coffee shop every day can cost you a bunch. There are better ways to spend that money.

Consider gardening. This can be a fun hobby as well as a way to save money on produce.

You can have a romantic night in with a bottle of wine and a nice, home-cooked meal. You don’t need to go out and spend $100 or more on a date.

Learn to say no. One of the easiest ways to live on a tight budget is simply to refuse things that will cost you a lot of money. This doesn’t mean that you have to stop having fun, but it does mean you have to know when it’s best to turn people down. Your friends may want you to go on a weekend vacation with them. Perhaps your significant other wants to exchange fancy Christmas gifts this year.

Get comfortable explaining to people that you’re on a tight budget. Let them know that it’s not personal when you turn them down. You can even suggest a cheaper alternative.

You don’t have to say no to absolutely everything. If you’re dying to go to a certain concert, tell your friends about it, but be ready to pass up various other pricey things your friends want to do, too.

Exercise for free. Lots of people spend money on expensive exercise classes or gym passes that they barely use. Here are some tips for saving money when you exercise:

Go running outside instead of at the gym. If it’s too cold, find an alternate workout you can do indoors.

If you love yoga but can’t afford a pass, look into donation-based classes. Many studios have at least one of these classes a week, and you can mix and match while paying for only what you can afford. You can of course practice yoga at home on your own.

Invest in a few exercise videos. Although it may cost a few dollars to buy them, you can use them repeatedly at home and avoid the cost of classes. This is a convenient way for self-disciplined people to work out.

About This Article

wikiHow is a “wiki,” similar to Wikipedia, which means that many of our articles are co-written by multiple authors. To create this article, 16 people, some anonymous, worked to edit and improve it over time. Together, they cited 11 references.

To live on a tight budget, spend less on food by buying bulk, store-brand food at the grocery store whenever possible and limiting how often you eat out. Also, have fun at home instead of going out by playing games, making your own drinks, and watching movies, which will save you a lot of money. If you need new clothes, try reasonably-priced department stores, thrift stores, or stores with big sales so you can shop without feeling guilty. You can also use coupons to save money at the grocery store, online, and anywhere else you shop.